Dell Computer and IBM ruled the roost in U.S. server sales last quarter, according to a new report that shows Dell dominating its niche and Big Blue extending its overall lead--but Sun Microsystems and Hewlett-Packard slipping.

IBM sold $1.32 billion worth of servers in the third quarter in the United States, claiming the leader spot with 33 percent of the $4.05 billion total market, according to a study by research firm Gartner Dataquest. While Big Blue saw its market share increase 3.9 percentage points compared with the third quarter of 2001, second-place HP slipped 1.6 percentage points to 23 percent, and No. 3 Sun dropped 4.5 percentage points to 17 percent.

Servers are higher-end machines that typically run round the clock to tackle critical computing tasks such as logging a retail chain's sales or powering a stock exchange. They range from high-end Unix servers and mainframes--with numerous processors and multimillion-dollar price tags--to comparatively inexpensive Intel-based machines running a Linux or Microsoft Windows operating system. These Intel-based servers are getting more powerful each year.

Dell, which sells only Intel-based servers, increased its overall market share 2 percentage points to 12 percent to keep hold of fourth place. However, within the Intel server segment of that market, Dell's revenue share increased a more dramatic 4 percentage points to 28 percent, placing the company top in that niche.

In second place was HP, which inherited Compaq's strong ProLiant-brand Intel server business after the merger of the companies. However, the company has been unable to stave off Dell's threat and dropped 5.5 percentage points in Intel server market share to 25 percent. Meanwhile IBM, the No. 3 Intel server seller, continued its steady growth with a 2.9-point gain to 18 percent.

Worldwide, HP remains at the top of the heap in terms of how many servers were shipped, Gartner said in October. But a more important measurement of success is in share of sales, since so much of total server spending is for a small number of very expensive systems.

The biggest single segment of the server market in recent years has been the hotly contested Unix market, dominated for years by Sun but now seeing No. 2 HP and No. 3 IBM put pressure on the leader. However, Intel server sales were the larger market in the third quarter--a victory for Intel, Microsoft and other allies who are touting cheaper computers with "commodity" components as replacements for more elaborate and customized Unix servers.

Sun had retaken some of the Unix market share lost to IBM earlier this year, but now has given some back. Sun's $699 million in Unix server sales gave it a 47 percent market share, a 7.7 percentage-point drop from the year-ago quarter; IBM gained 5.1 percentage points to 24 percent while HP gained 3.6 points to 26 percent.